All Forum Posts by: Jeff S.

Dmitri Korobov, I'll take a stab at it. Most lenders (banks and HML) will only lend to a business for fix and flip investing, so forming an LLC would be the first step. Drafting a fair operating agreement is the crux here. It will spell out how profits will be distributed, who is liable for what, and how expenses are paid, and anything else you haven't thought of. It will also dictate how you and your partner will squash problems - mediation, litigation, etc. A good RE attorney will be able to guide you through this process fairly quickly.

Have you talked to any of your flipper's previous partners and how they did deals? I would ask for references and really vet the guy. If you are going to do business with this person you should really get to know them.

As far as getting around the 3 month cash balance. You can go the hard money route, but be sure you've really crunched the numbers because it's a ticking clock once you are funded.

C Coley Mitchell welcome to BP! And congrats on the kiddo, they are so much fun!

Kodjovi Sevon, welcome to BP!

That's awesome that you are already jumping into real estate investing. Could you give us some details on the property and deal structure? I know the process can be crazy some times. I hope it goes smoothly for you. Good luck!

Bill Gulley, thanks for explaining common wall agreement. I didn't see your original post until after I had posted :)

Hey David Elsea, this is a really cool find! There are a lot of unknowns though. I've seen this work and I've also seen it fail horribly. It worked when both owners were actively managing their respective sides of the property. It didn't work when one owner did not either actively manage or communicate with the other owner. examples being: pest control, roof repairs, and other "shared problems". One solution was to have an HOA (obviously this was a larger operations than an 8-plex), but it was perpetually under-funded.

Can you provide some additional details? Estimated rents, proposed purchase price, etc. Since you said it's not currently being rented. I would be interested to hear what is motivating the seller to only list half the property too. Who knows, maybe you could get some seller financing since its a non-performer as-is. Ultimately I would want to have control over both sides- it would be the best insurance against the risks you referenced.

This sounds passive aggressive on the seller's part. No communication with you but they want to proceed with closing. It raises red flags in my mind to enter into a lease with a tenant that is starting out on the wrong foot. If they are stuck on $800/mo rent, would they be open to decreasing purchase price of the property for the full lease amount? Or maybe the amount of security deposit and $400 x 12 months rent?

If things don't work out you can still refund pro-rated rent. Michael raises a good point about keeping a tenant in the place. But if they are shorting you $5k in market rents it shouldn't come out of your pocket.

Esteban, Of course that's okay. But I would recommend "crowd sourcing" your questions with the whole BP community. As no one is an expert in everything, it is much better to get the opinion of many experienced investors...especially when you are starting out!

Esteban Pau, welcome to BP! There should not be an issue with citizenship and ability to invest. I've met many non-us citizens that have invested in real estate here in the US. The only difference between you and them is that they actually live here, or travel here a few times during the year to check on those investments.

Adding your salary for principal pay down is not a bad idea. Most investors prefer to let the renter pay-down the mortgage and keep their own cash savings for times when the property may be vacant or need repairs.

Partnering with a trusted friend in the States (or UK) may be the most logical next step to begin researching markets and potential investments.

Good luck!

I think you are on the right track offering similar amenities as the competition. That would justify market rents, but above market rents is a different animal. Are your rents at or below market as is? Do the tenants pay their own utilities?

I think a capital improvement like a new A/C would benefit you more through depreciation rather than appreciation. I'm interested to see what other investors have done to command higher rents too.

The advice above is perfect. Definitely start by trying to find an internship with some real estate professionals. What interests you the most? Commercial, rehabs, rentals, notes? I'm sure you can find a pro or company of pro's that would guide you during the summer. Making those connections now will accelerate your investing education. Another thing to consider is the market you want to live in post-graduation. You may be able to demo a market and intern at the same time. Both are short term commitments towards your long-term goals.